Digital Realty Expands
Digital Realty Acquires Blackstone's $3.5B Stake in Three Virginia Data Centers, Gaining Full Ownership
Key Points
Blackstone holds an 80% interest in Digital Realty's two Manassas centers and a 50% interest in the 96-MW Sterling center, for a total of 288 MW of capacity across the three assets.
All three data centers are fully leased to three distinct investment-grade hyperscale customers, with each center providing 96 MW of IT capacity.
The Blackstone-affiliated sale involves non-voting common stock that will automatically convert to common stock upon transfer; Morgan Stanley is the sole underwriter, and the offering is conditioned on the closing of the Blackstone Acquisition, with Digital Realty not receiving any proceeds from the sale.
Digital Realty has agreed to pay $3.5 billion to buy out Blackstone's stakes in three Northern Virginia data centers, according to MarketWatch. The deal gives Digital Realty full ownership of 288 megawatts of hyperscale capacity — all of it already fully leased to investment-grade customers.
Digital Realty will pay $1.2 billion in cash and $2.3 billion in company shares, Bloomberg Law reported. The deal is expected to close around June 30, 2026.
Three Fully Leased Virginia Centers Change Hands
The deal covers two data centers in Manassas, Virginia, and one in Sterling, Virginia. Each center holds 96 megawatts of IT capacity, totaling 288 megawatts across all three sites, according to Bloomberg Government. Blackstone currently owns an 80% stake in the two Manassas centers and a 50% stake in the Sterling center.
All three centers are leased to three separate investment-grade hyperscale customers — meaning tenants with top-tier credit ratings. Digital Realty CEO Andy Power said the deal lets the company "consolidate 100% ownership of premier, fully leased assets in our most important market." After closing, Digital Realty will own 100% of all three sites.
Blackstone Cashes Out, Recycling Capital Into New AI Sites
Blackstone is selling these stabilized assets to fund newer, higher-density "AI factory" developments elsewhere. Blackstone President Jon Gray said the firm is "recycling capital from these stabilized assets into our massive global pipeline of new developments." The partnership with Digital Realty, he added, "remains a cornerstone of our digital infrastructure strategy."
The two companies first announced a $7 billion joint venture in December 2023 to build 10 hyperscale data centers across Northern Virginia, Frankfurt, and Paris. By selling the three mature Virginia sites now, Blackstone locks in gains from that original investment. The companies will keep working together on remaining joint-venture assets in Europe, according to TipRanks.
Morgan Stanley Underwrites $2.3B Share Sale for Blackstone Exit
To pay for the deal, Digital Realty is issuing $2.3 billion worth of non-voting common stock to Blackstone funds. Morgan Stanley is the sole underwriter for the secondary offering, according to Seeking Alpha. The shares convert automatically to regular common stock once they are transferred.
Digital Realty will not receive any money from the share sale — that cash goes to Blackstone. Analysts at Goldman Sachs called the deal "slightly dilutive in the short term" due to the large share issuance. But they said acquiring 288 megawatts of fully leased capacity is a "net-positive for long-term" funds from operations — the key profit measure for real estate investment trusts.
Northern Virginia's Data Center Dominance Grows Even Stronger
Northern Virginia, often called "Data Center Alley," handles roughly 70% of the world's internet traffic. Power-ready land in the region has become extremely scarce. That scarcity makes these 288 megawatts especially valuable — Digital Realty now captures 100% of future rent increases instead of splitting them with Blackstone.
The acquisition also sidesteps tough new regulations. Virginia lawmakers have been adding noise rules and power restrictions that slow new "greenfield" construction. By taking full ownership of three already-operating sites, Digital Realty avoids those hurdles entirely, according to Bloomberg Government.
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